F-1 students who have been in the U.S. for more than 5 years become resident alien for tax purposes. While filing 1040 is easier than 1040NR and tax software is readily available to assist you, it is not obvious how to input 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, which is intended for non-resident aliens. This post describes how to enter 1042-S information into TurboTax under some common circumstances.

Income Code 16

It is for Scholarship and Fellowship/Grant. Here are the steps:

  1. Open your tax return.
  2. At the right upper corner, in the search box, type in “1098t” and Enter.
  3. Select “Jump to Form 1098-T”.
  4. On screen for question “Do you want to enter your higher education expenses?”, answer “Yes”.
  5. Go through the step-by-step interview questions.
  6. On screen, “Did you get a 1098-T from school for 2017?” answer Yes, follow prompts to continue.

Income Code 20

It is for Compensation during studying and training. For example, students from China can claim an annual tax-free income of $5000 due to the Article 20 of United States-The People’s Republic of China Income Tax Convention.

To report income:

  1. In your Federal - Wages & Income section, scroll down to “Less Common Income”, the very last section.
  2. Next screen, “Other Wages Received”, select “Yes” to continue.
  3. Skip the next screen.
  4. Next screen, “Any Other Earned Income”, select “Yes”.
  5. Next screen, Enter Source of Other income, follow prompts and enter the positive amount and “1042-S income”.

You will see your tax burden increases. The next step is o claim tax exemption to offset the increase of taxable income:

  1. In your Federal - Wages & Income section, scroll down to “Less Common Income”, the very last section.
  2. Scroll down and click on Miscellaneous, and click “Other Reportable Income” (the very last item), and click “Start”.
  3. Report the treaty income as a negative amount, with a name of something like “Tax-exempt amount due to US-China treaty”.

You should see your tax burden returns to the previous state. You would need to file a Form 8833 and enter the treaty exemption as a negative amount.